Correlation Between DFS Furniture and Livermore Investments
Can any of the company-specific risk be diversified away by investing in both DFS Furniture and Livermore Investments at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining DFS Furniture and Livermore Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and Livermore Investments Group, you can compare the effects of market volatilities on DFS Furniture and Livermore Investments and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in DFS Furniture with a short position of Livermore Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and Livermore Investments.
Diversification Opportunities for DFS Furniture and Livermore Investments
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DFS and Livermore is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and Livermore Investments Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Livermore Investments and DFS Furniture is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on DFS Furniture PLC are associated (or correlated) with Livermore Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Livermore Investments has no effect on the direction of DFS Furniture i.e., DFS Furniture and Livermore Investments go up and down completely randomly.
Pair Corralation between DFS Furniture and Livermore Investments
Assuming the 90 days trading horizon DFS Furniture PLC is expected to generate 4.31 times more return on investment than Livermore Investments. However, DFS Furniture is 4.31 times more volatile than Livermore Investments Group. It trades about 0.24 of its potential returns per unit of risk. Livermore Investments Group is currently generating about 0.04 per unit of risk. If you would invest 12,900 in DFS Furniture PLC on September 13, 2024 and sell it today you would earn a total of 1,480 from holding DFS Furniture PLC or generate 11.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFS Furniture PLC vs. Livermore Investments Group
Performance |
| Timeline |
| DFS Furniture PLC |
| Livermore Investments |
DFS Furniture and Livermore Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and Livermore Investments
The main advantage of trading using opposite DFS Furniture and Livermore Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture position performs unexpectedly, Livermore Investments can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Livermore Investments will offset losses from the drop in Livermore Investments' long position.| DFS Furniture vs. Berkshire Hathaway | DFS Furniture vs. Hyundai Motor | DFS Furniture vs. Samsung Electronics Co | DFS Furniture vs. Samsung Electronics Co |
| Livermore Investments vs. Worldwide Healthcare Trust | Livermore Investments vs. Beazer Homes USA | Livermore Investments vs. Ecofin Global Utilities | Livermore Investments vs. Home Depot |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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